Vietnamese Experts: Limited Room for Rate Cuts, Lending Rates Unlikely to Fall Below 10%
At Vietnam Investment Forum 2027, experts said rising credit demand, funding costs and pressure on bank liquidity limit the scope for interest rate cuts. A TPBank executive said lending rates would struggle to fall below 10% given the cited U.S. dollar interest rate, exchange rate premium and bank net interest margin.
At a macroeconomic discussion at Vietnam Investment Forum 2027, BIDV Chief Economist Cấn Văn Lực said inflation and high interest rates are constraining economic growth, making further rate cuts in Vietnam difficult. He said rates began rising rapidly in the fourth quarter of 2025. The credit growth forecast for the year rose from an initial 15% to 16% to about 19%, increasing demand for funds.
Experts at the macroeconomic discussion at Vietnam Investment Forum 2027.（VietVance）
Cấn Văn Lực said policy interest rates are already relatively low, raising questions about whether banks could continue attracting funds if deposit rates were cut sharply. He suggested trying a reduction of about 0.5 percentage points in deposit rates and then observing the market’s response. On the goal of lowering lending rates by 1.5 to 2 percentage points, he noted that banks’ net interest margin had fallen from about 3% at the end of 2025 to 2.8% in the first quarter of 2026 and about 2.5% currently. Lending rate cuts should therefore be targeted, he said.
TPBank Deputy General Director Nguyễn Việt Anh said Vietnam is unlikely to return to its earlier period of low funding costs. If U.S. dollar interest rates are about 5%, he said, adding an exchange rate premium of about 2% to 3% and a bank net interest margin of about 2.5% makes it difficult for bank lending rates to fall below 10%. He also said credit grew by more than 11% in the first 10 months of 2026, while deposits grew by nearly 10%, leaving a gap that continues to put pressure on banks.
TPBank Deputy General Director Nguyễn Việt Anh.（VietVance）
Cấn Văn Lực said improving liquidity, accelerating public investment disbursement, advancing stalled projects and speeding up tax refunds could help lower interest rates. Nguyễn Việt Anh said banks’ balance sheets would come under greater pressure if medium and long term funding needs continued to rely mainly on bank credit. He called for more financing through capital markets in 2027.
Nguyễn Đức Hải, Senior Investment Director at Manulife Investments Việt Nam, also said the economy needs deeper financial markets and more private sector investment. He said the corporate bond market still faces bottlenecks. In some cases, disclosure requirements for privately placed bonds may be stricter than those for public offerings, increasing companies’ compliance costs. Policy needs to balance risk control with the ability to raise funds, he said.
Nguyễn Đức Hải, Senior Investment Director at Manulife Investments Việt Nam.（VietVance）
Source: VietVance
